Dong’s ex-CEO acted ‘disloyally’, report concludes
The former head of Dong Energy lost his job for irresponsible and disloyal behaviour and as a result is not entitled to his full severance, according to a report by the law firm Norrbom Vinding into the behaviour of former CEO Anders Eldrup.
Of particular concern was the hiring of four individuals on extremely generous contracts that the company’s board only became aware of after a whistleblower stepped forward in February.
The report, released today, found that the four hirings lay outside the company's standard practise and constituted a breach of trust on behalf of Eldrup.
At a press conference today, Fritz Schur, the chairman of the partially state-owned company, argued that the situation was so severe that Eldrup was given no warning and was instead urged to resign with immediate effect.
“You can give warnings to footballers and civil servants but not after something as sensitive as a breach of trust between a board and a CEO,” Schur said. “We had to admit that there had been a lack of judgement by Eldrup and that a point of no return had been reached, which we could not fix with a warning.”
The report found that Eldrup had removed references to extraordinary bonus and severance deals for the four employees in memos about the hirings that were sent to the board.
“The sections described in general terms that these specialists were to receive extraordinary rewards," the report stated. "Instead he inserted a reference to general conditions of performance-based bonuses, but made no mention of the special agreements.”
The report added that if the passages would have been left in, it would have given the board reason to ask questions.
The contract for Jakob Baruël Poulsen, the company's senior vice president, particularly raised eyebrows, as he was entitled to a 20 million kroner severance package even if he decided to leave the position himself. The severance package was even larger than the 17 million kroner that Eldrup is technically entitled to.
Responding to the criticisms, Eldrup, in an interview with TV2 News, argued that the high salaries were necessary to secure the best talent when Dong set about expanding its fledgling wind energy arm.
“Three years ago we decided to invest in offshore wind,” Eldrup said. “It was only a small business for Dong at the time but we wanted to focus our efforts and put our best minds on it. Today it's a business with 1,000 employees and has already reaped a profit of 10 billion kroner for the business and it has incredible growth potential.”
Eldrup argued that the company’s results ultimately justified the hirings, since they helped build a company that now supports a growing wind energy industry in Denmark.
While Dong’s board announced that it was not going to pursue Eldrup for damages, the report’s conclusion means that he is only entitled to twelve months pay, or 6 million kroner, rather than his full severance pay of 33 months, or 17 million kroner.
After the finding was made public, Eldrup announced he would sue for his full severance.